What is a pollution haven? What will be an ideal response? ANSWER A pollution haven is a country with relatively lax environmental standards or enforcement. In effect, countries with strict standards export activities that pose high environmental risks to countries that are willing to accept the risks.
Date: September 10th, 2020
An exchange of developing country debt for an ownership position in a developing country business is called A) IMF conditionality. B) indirect investment. C) debt-equity swap. D) debt-rescheduling. ANSWER C
Date: September 10th, 2020
When a country’s currency is devalued A) output decreases. B) output increases and the money supply decreases. C) the money supply decreases. D) output decreases and the money supply increases. E) both the output and the money supply increases. ANSWER E
Date: September 10th, 2020
A country’s gross national product (GNP) is A) the value of all final goods and services produced by its factors of production and sold on the market in a given time period. B) the value of all intermediate goods and services produced by its factors of production and sold on the market in a given […]
Date: September 10th, 2020
Suppose the exchange rates between the United States and Canada are in long-run equilibrium as defined by the idea of purchasing power parity. If the law of one price holds perfectly, then differences between U.S. and Canadian rates of inflation would A) have no effect on nominal exchange rates. B) be completely offset by changes […]
Date: September 10th, 2020
To answer the following question, please refer to the figure below. Concentrating only at the lower right quadrant, discuss the effects of a change in U.S. expected inflation. What will be an ideal response? ANSWER Lower right quadrant shows the equilibrium in the U.S. Money Market, where = / A given interest rate R1$ […]
Date: September 10th, 2020
What is the expected dollar rate of return on dollar deposits if today’s exchange rate is $1.10 per euro, next year’s expected exchange rate is $1.165 per euro, the dollar interest rate is 10%, and the euro interest rate is 5%? A) 10% B) 11% C) -1% D) 0% E) 15% ANSWER A
Date: September 10th, 2020
If some industries exhibit increasing returns to scale in each country, we should not expect to see A) intraindustry trade between countries. B) perfect competition in these industries. C) interindustry trade between countries. D) Either B or C. ANSWER B
Date: September 10th, 2020
Discuss the effects of ongoing inflation based on the PPP theory. What will be an ideal response? ANSWER Other things equal, money supply growth at a constant rate eventually results in ongoing price level inflation at the same rate as the money supply growth, but changes in this long-run inflation rate do not affect […]
Date: September 10th, 2020
In 1975, wage levels in South Korea were roughly 5% of those in the United States. It is obvious that if the United States had allowed Korean goods to be freely imported into the United States at that time, this would have caused devastation to the standard of living in the United States, because no […]
Date: September 10th, 2020
